Citizens windstorm insurance for all. Closing loopholes for a “bad-faith” insurance claim. Creation of an insurance advisory council. Requiring mediation before policyholders can sue their insurer.

They are among proposed insurance law changes that will face scrutiny in the Florida Legislature this spring. More are likely to follow with five weeks left before the session’s scheduled March 4 start.

So far, no insurance-related bills have been filed for the special session that’s slated to begin on Monday. Condominium safety is one of the subjects that Gov. DeSantis has said he wants addressed.

The biggest proposed insurance change so far, and likely toughest to get passed, would make state-owned Citizens Property Insurance Corp. the provider of all windstorm insurance sold to homeowners in the state.

First proposed last year, the bill would end Citizen’s status as “the insurer of last resort” that provides multiperil coverage to customers who cannot obtain it affordably from the private market.

Spencer Roach, the North Fort Myers-based Republican representative who co-sponsored last year’s version, has retired from the House. But Rep. Hillary Cassel of Broward County, the bill’s co-sponsor, refiled her version in December, shortly before announcing that she had switched political parties from Democratic to Republican. Cassel was then appointed as vice chair of the House Subcommittee on Insurance and Banking, which should boost the bill’s chances of being brought forward for debate by the subcommittee.

Cassel did not respond to a request to discuss the new bill, which is co-sponsored by Democratic House members Christine Hunschofsky, Anna Eskamani, and Marie Paule Woodson.

Roach and Cassel presented their proposal in February to the House Subcommittee on Insurance and Banking, but the group did not vote on it and it wasn’t heard by any other legislative committee.

Regardless of the sponsors’ political parties, the bill will face scrutiny and pushback by lawmakers who will be reluctant to expand the state’s exposure to losses during a time that hurricanes appear to be getting stronger and more destructive.

Citizens, now with fewer than one million policies, is entering the third year of its depopulation push after peaking at 1.4 million policies in September 2023. Lawmakers, regulators and members of the company’s own governing board have long warned that nearly all Florida insurance customers would face steep assessments if Citizens ever becomes unable to pay all claims after a severely destructive hurricane or string of storms.

The bill would require Citizens to make windstorm coverage available for any home, including condo buildings and mobile homes, and their contents.

Private insurers would be able to sell the coverage alongside their products — which would consist of everything else that insurance normally covers, including fire, theft, liability from animal bites, lightning strikes, and flooding from ruptures of pipes, water heaters, washers, driers and dishwashers.

During a hearing before the Insurance and Banking Subcommittee in February, Citizens CEO Tim Cerio said the proposal could cause Citizens’ reinsurance costs to increase by 645% to $5.6 billion. “We don’t even know if there’s enough capacity in the reinsurance market” to provide the needed backstop, he said.

Roach and Cassel argued that the idea would save policyholders money, by saving money that insurers pocket during years with no storms, so it would be available to pay claims when hurricanes strike. Florida homeowners currently pay three times the national average for property insurance.

A former Florida state representative who proposed a similar plan in 2006 projected that the pool would amass an $82 billion surplus if the state managed to avoid catastrophic storms for 10 years. Lawmakers turned a blind eye to his proposal, while Florida avoided a direct hit from a hurricane for 10 years.

With hurricanes now hitting Florida at an accelerated pace — six have come ashore since 2020 — it might not be so easy to accumulate such a large surplus, financial comparison website Bankrate.com suggested in an October post.

‘Bad-faith’ claims would face restrictions

A deputy commissioner of the Office of Insurance Regulation said at the Florida Chamber Insurance Summit in December that the office did not want major new reforms enacted this year. Still, there’s a proposal filed by Sen. Keith Truenow, a Republican representing Lake County and a part of Orange County, to impose new restrictions on bad-faith claims against insurance companies, which is certain to generate opposition from the lobby representing plaintiffs attorneys.

Bad-faith claims typically involve proving that insurers acted negligently or intentionally, including by delaying a settlement in an unreasonable manner, denying claims without investigating, failing to communicate with clients, and misrepresenting policy terms.

The bill would require a court ruling and final judgment that an insurer breached the insurance contract before a policyholder could file a bad-faith claim that can generate an additional financial award. It would bar bad-faith claims from being triggered by insurer payments that follow a demand for judgment or notice of intent to litigate.

It would also require plaintiffs to cite specific bad-faith laws that the insurer is accused of committing, the amount of damages needed to “cure” the violation, and require that the damages sought be available under terms of the insurance customer’s policy.

Under the bill, damages sought by the insured in a bad-faith claim could not include attorney fees or costs.

Mark Delegal, a lobbyist whose firm represents insurance interests including the Florida Justice Reform Institute, says Truenow’s bill is intended to fix “loopholes” in state laws that plaintiffs attorneys are “exploiting” to collect legal fees from insurers.

While reforms enacted in 2022 and 2023 “substantially, revolutionarily addressed this problem,” Delegal said, “now the trial bar is up to its same old tricks and exploiting loopholes in the statutes that need to be plugged.”

Asked why he filed the bill, Truenow, through a spokesman, said, “We’ve learned over the past few legislative sessions that there are plenty of carrots and sticks to ensure there is balance in the system. We’re doing our best to ensure consumers get paid quickly for their claims and that we have the right levers to pull on to expand and foster a healthy marketplace. For example, I want to explore what else we can do to ensure insurance companies pay consumers for their losses without clogging up the court system.”

He called the bill, which also includes a bid to cut training hours for agents, “a starting point to get this important conversation rolling,” adding, “my door will be open to all sides of this issue so we get it right.”

Chip Merlin, founder of the Merlin Law Group, said the bad-faith proposal would make it harder to hold insurance companies responsible for their “bad-faith actions” and make it “nearly impossible” for consumers to sue their insurers.

“The claims executives simply do not want to be held accountable for acting in bad faith and do not want to be sued when their own actions harm their customers,” he said.

Reducing coursework for insurance agents

Truenow’s bill also proposes reducing the coursework required to become a general lines insurance agent, from 200 to 60 hours.

Truenow called the 200-hour requirement an “extraordinary barrier to entry” and said the bill “will allow us to examine the pros and cons of rightsizing these requirements to better correspond with national standards and whether that can better serve the needs of Florida’s consumers.”

Mediation would be required

Prior to filing a lawsuit, a policyholder would have to attempt to settle a dispute with an insurer by participating in mediation under a Senate bill filed by Tina Polsky, a Democrat representing parts of Broward and Palm Beach counties.

Creation of advisory council

Sen. Lori Berman, a Democrat representing part of Palm Beach County, proposes creating an Insurance Solutions Advisory Council to compile and analyze data and information about the state’s property and automobile insurance markets.

The council would consist of various insurance experts and be in place for roughly five years between Oct. 1, 2025, and June 30, 2030.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at rhurtibise@sunsentinel.com.